What is a finance settlement figure and how do I get one?

If you have an outstanding car finance agreement — PCP, HP, or a personal loan secured against a vehicle — and you want to sell the car, change it, refinance to a better rate, or simply pay off the agreement early, you need a settlement figure. This is the single most important number in any decision about exiting or changing a finance agreement, and it is widely misunderstood.

The settlement figure is rarely what people expect. It is not simply your remaining monthly payments added together. It is not the original loan amount minus what you have paid. And it is not always what appears on your most recent statement. Understanding exactly what a settlement figure is, how it is calculated, and how to request one is essential before making any decision that depends on it.

This guide explains what a settlement figure means, your legal rights when requesting one, how the calculation works (including the 28-day and 58-day rules), and what to do with the figure once you have it.

What is a settlement figure?

A settlement figure is the exact amount of money required to pay off your finance agreement in full at a specific date. Once you pay this amount, the agreement is closed, and the finance company’s legal interest in the vehicle ends — meaning the car becomes legally yours (rather than being owned by the lender until the final scheduled payment).

Settlement figures only apply to regulated consumer credit agreements: PCP (Personal Contract Purchase), HP (Hire Purchase), and conditional sale agreements. If you bought your car with a personal loan that is not secured against the vehicle, you do not need a settlement figure to sell the car — the loan and the car are legally separate. You would still need to pay off the loan, but the settlement process is different and is treated as standard early loan repayment.

For PCP and HP agreements specifically, the finance company is the legal owner of the car. Until the agreement is settled, you cannot legally sell, scrap, or transfer ownership of the vehicle. The settlement figure is therefore not just a financial figure — it is the gateway to being able to legally act on the car at all.

Why a settlement figure is not the same as your remaining balance

If you look at your most recent finance statement, you might see a balance owed. You might also calculate what is left by multiplying your monthly payment by the number of months remaining. Neither number is your settlement figure.

The settlement figure differs from both because of two adjustments:

The statutory interest rebate. Under the Consumer Credit Act 1974 and the Consumer Credit (Early Settlement) Regulations 2004, you are entitled to a rebate on the interest you would have paid if you had continued the agreement to its scheduled end. Interest on most car finance is front-loaded — meaning the early months of your agreement include a higher proportion of interest in each payment, with a smaller share going toward the capital. When you settle early, you have not yet incurred most of the future interest, and the lender must give back the portion you have not yet paid for.

The deferment period. When the rebate is calculated, the law allows the lender to assume that you settle the agreement a fixed number of days after you give them notice. This is called the deferment period, and the rules are different for shorter and longer agreements (covered in detail below). This means the rebate is calculated as if you continued paying interest for an extra 28 or 58 days beyond your settlement request, which keeps the settlement figure modestly higher than a pure mid-month calculation would suggest.

For balloon-payment agreements like PCP, the settlement figure also includes any outstanding optional final payment if you intend to keep the car (rather than handing it back at the end of the agreement). On a typical PCP at year three of a four-year agreement, the settlement figure will include the remaining monthly payments plus the entire optional final payment, reduced by the interest rebate.

The 58-day rule (and the 28-day rule) explained

The deferment period is the part of settlement calculation that most surprises consumers. Under regulation 4 of the Consumer Credit (Early Settlement) Regulations 2004, when you settle early, the lender applies one of two deferment periods:

The 28-day rule applies if your agreement was for less than £9,000 of credit, and the duration of the agreement was 10 years or less. In this case, the lender treats your settlement date as 28 days after the date you gave notice, for the purposes of calculating the rebate.

The 58-day rule applies if your agreement was for more than £9,000 of credit, or the duration of the agreement was more than 10 years. In this case, the lender treats your settlement date as 58 days after the date you gave notice, for the purposes of calculating the rebate.

For most car finance agreements in the UK, the 58-day rule applies, because most new and used car finance is for amounts above £9,000. This means that when you settle, you effectively pay an additional approximately 58 days of interest beyond what you would in a pure mid-day calculation. On a typical agreement at 10.9% APR with a remaining capital of £12,000, this works out to roughly £210 of additional interest — a meaningful but not large amount, and one that lenders are entitled to keep under the regulations.

The legal logic for the deferment period is that the lender is being given short notice that a long-term loan is ending, and is entitled to a modest interest charge for the disruption. The practical impact is that you cannot avoid this small premium even if you have the cash available to settle today — it is built into the regulatory formula.

How to request a settlement figure

You have a statutory right to request a settlement figure from your finance company at any time during the agreement. Under section 97 of the Consumer Credit Act 1974, the lender must provide the settlement figure within seven working days of your written request, free of charge.

In practice, most lenders allow you to request a settlement figure through several channels:

Online or app: most major UK car finance lenders (Black Horse, Santander Consumer Finance, MotoNovo, BNP Paribas, V12 Vehicle Finance, Close Brothers) have customer portals where you can generate a settlement figure instantly. This is the fastest method.

Phone: the customer services number is on your finance agreement, on your monthly statement, or on the lender’s website. Phone requests are typically processed the same day.

Letter or email: these channels exist but are typically slower than online or phone. Use only if other channels are unavailable.

When you request the figure, ask specifically for a full early settlement figure. This is distinct from a voluntary termination figure, which is relevant only if you are exercising your right under section 99 of the Consumer Credit Act to end the agreement and return the car (rather than buying it out). Confusing the two can lead to receiving the wrong figure for your situation.

How long is a settlement figure valid for?

Settlement figures are quoted with a specific validity date. This is typically between 10 and 28 days from the date of issue, though some lenders quote shorter windows.

The reason for the time limit is that interest continues to accrue daily on your outstanding balance. The settlement figure is calculated for a specific date, and that calculation only holds true if the agreement is settled by that date. If you delay beyond the validity window, you will need to request an updated settlement figure, which will be marginally higher to reflect the additional days of accrued interest.

If you are planning to part-exchange a financed car, get the settlement figure as close to the date of the transaction as practical. A figure obtained two weeks before sale may be valid — but if circumstances cause delay, an updated figure from the lender takes only a day or two to obtain.

What to do with your settlement figure

The settlement figure tells you exactly what you owe. What you do with it depends on what you are trying to achieve.

If you are part-exchanging at a dealer. Give the dealer your settlement figure (or let them obtain their own from your lender — they will typically do this directly). The dealer will pay the settlement amount to your finance company directly, and any remaining trade-in value above the settlement becomes your deposit toward the next car. If your car’s trade-in value is less than the settlement figure (negative equity), the dealer will typically roll the shortfall into your new finance agreement. We covered this in detail in our guide on part exchanging a car with outstanding finance.

If you are selling privately. The settlement figure is the minimum the car must sell for to clear the finance. If the sale price exceeds the settlement figure, you can either pay the settlement first and then sell the car (preferred for a clean transaction), or arrange for the buyer to pay the settlement amount directly to your finance company and the remainder to you. The latter requires the buyer’s cooperation and is worth documenting carefully — most private buyers prefer to wait until the finance is settled before transferring funds.

If you are paying off the agreement and keeping the car. Pay the settlement amount to the finance company by the validity date. The agreement closes, the lender removes their interest in the car, and the V5C registration certificate is updated to show you as the registered keeper (this happens automatically on most modern agreements).

If you are refinancing to a better rate. Use the settlement figure as the amount you need to borrow on the new agreement to fully replace the existing finance. The new lender will typically arrange to pay the settlement directly to the existing lender, settling the old agreement and creating the new one in a single transaction. Refinancing only makes financial sense if the saving on monthly payments or total interest from the new agreement exceeds any fees and is sufficient to justify the credit search impact.

Are there any fees for early settlement?

Under the Consumer Credit Act 1974 and the Early Settlement Regulations, regulated consumer credit agreements cannot charge additional fees for early settlement beyond the statutory interest rebate calculation described above. There is no ‘early settlement penalty’ in the way that some commercial mortgage products have early repayment charges.

What you receive is the rebate as calculated under the regulations — which is less generous than you might expect because of the 28- or 58-day deferment, but is the statutory framework. Lenders cannot add additional charges on top.

A small number of older agreements (predating major regulatory updates) may include administration fees of £5–10 for processing a settlement. These are unusual on modern agreements. Check your finance agreement’s terms and conditions if in doubt.

What if I cannot afford the settlement figure?

If you need to exit a finance agreement but cannot afford the settlement figure as a lump sum, you have two options worth knowing about:

Voluntary termination (VT). Under section 99 of the Consumer Credit Act 1974, if you have paid at least half of the total amount payable under the agreement, you have the legal right to terminate the agreement and return the car. You owe nothing further to the lender, provided the car is returned in fair condition (subject to fair wear and tear). VT is different from settlement — you do not keep the car, and the agreement ends rather than being paid off. VT can be recorded on your credit file in a way that some lenders view less favourably than a paid-off agreement.

Voluntary surrender. If you have paid less than half of the total amount payable, you can still hand the car back, but you remain liable for the difference between what you have paid and the 50% threshold (subject to court rulings). This is significantly worse for your credit record and finances than VT and should only be considered as a last resort.

For agreements where you can afford the monthly payments but cannot afford a lump settlement, simply continuing the agreement to its scheduled end is the cheapest option.

Browse used cars at Carsa

If you are looking to part-exchange your current financed car for a different vehicle, Carsa handles the finance settlement directly with your lender as part of the transaction — no need to settle separately in advance. Carsa stocks a wide range of used vehicles priced on average £700 below market value, with a 90-day warranty included.

Finance available from 10.9% APR representative. Carsa is a credit broker, not a lender. The rate you are offered will depend on your individual circumstances.

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